Operating ROA Is Calculated as __________,While ROE Is Calculated as _________

question 30

Multiple Choice

Operating ROA is calculated as __________,while ROE is calculated as _________.

• A)EBIT/Total assets;Net profit/Total assets
• B)Net profit/Total assets;EBIT/Total assets
• C)EBIT/Total assets;Net profit/Equity
• D)Net profit/EBIT;Sales/Total assets

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Definitions:

Absorption Costing

A methodology for product costing that comprehensively adds up the costs of direct materials, direct labor, and both fixed and variable manufacturing overheads.

Variable Costing

An accounting method that only includes variable costs (costs that change with production levels) in the cost of goods sold and treatment of fixed costs.

Production Costs

The total expenses incurred in the manufacture of products, including costs related to labor, raw materials, and overhead.

Variable Production Costs

Expenses that fluctuate with the level of output or production, including costs like raw materials and direct labor.